It’s no secret that not everyone has perfect credit and credit sort of runs our lives. It determines our interest rate in buying a home, securing personal loans, car leases, and sometimes even securing a job! When you know your credit is less than perfect, you may think there’s no point in even making an attempt to even both applying for a loan, but we know better. When we say “less than perfect,” we mean a FICO score of less than 579. There’s a ton you can do to make the process easier and less of a hassle when you need a loan now. We know a thing or two about how to make this process a little simpler so you can stop stressing every single time you need to grab a loan application because credit should not be the only thing deciding your future.
Start rebuilding credit
Sounds like a no-brainer, right? You actually have a ton of options here. Experian just introduced something called Boost, which allows you to link your bank account to Experian. If you pay your bills like your electricity and cable bill on time, you can now get credit for that. People see their score jump by an average of 14 points! Once you pay your utility bills consistently for three to six months, you can link your bank account and start seeing an increase.
You can also get a secured credit card. Secured credit cards require deposits but then function like a typical credit card. Use that secured card a little each month and pay off the balance in full, and you’ll see that score increase!
You also dispute errors in your report. Ensure everything on your credit report is accurate. If not, get it corrected. No need to pay for mistakes!
With less than perfect credit, borrow a friend or family member’s credit, if they’ll let you. What we mean is enlist the help of a co-signer. The co-signer, typically a close friend or family member, who signs off on the loan stating that they’ll pay your loan should you default. We both know you’re a trustworthy person, and that won’t happen though.
Friends and Family
Friends and family are also a route a lot of people turn to when their credit is less than perfect. With interest rates at typically 0% depending on your relationship and terms pretty favorable, this is a great option. There’s typically not a lot of paperwork because they aren’t usually asking for an application.
We do recommend outlining some terms because this can get complicated. Money can complicate your relationship, so know that going in.
Bad Credit Lenders
They exist, we promise! There are plenty of lenders out there that offer loans to those with credit scores below 580. You just have to search for them. Expect to pay a higher interest rate or make more frequent payments, but there is someone out there for you.
Get a no credit check loan
There are actually a ton of lenders available that offer loans with no credit check! I know it sounds like we left the best for the bottom of the list, but there are options out there! Let Me Bank, offers a whole list of resources that put more emphasis on the income levels versus the credit score. The FinTech industry has been booming with these types of lenders versus traditional lenders. They typically look at what goes in your checking account each month, and that’s how they make a decision on your eligibility and loan amount.
There’s one major benefit that Let Me Bank points out from these types of loans. “Plus, because these lenders offer installment loans, you can actually start to improve your credit scores by making your payments on time each month. If this is part of your borrowing goal, just make sure you confirm that your chosen lender reports to one or more credit bureaus before taking out the loan,” Let Me Bank states.
If poor credit has been keeping you from securing low-interest rate loans, this could be the stepping stone you need you to start getting better interest rates.
Maybe it’s time to skip the loan
We’re sorry if this sounds a bit harsh, but it could be time to put the loan on hold and focus more on credit repair. This could be the perfect time to really narrow in on trying to repair and build, so you don’t get taken advantage of, which brings us to the next and final point.
There are a lot of predatory lenders out there! They rely on people in desperate situations who need loans immediately and have nowhere else to go and do not have the credit to go elsewhere. They offer high, and we mean high-interest rates. These lenders will rush paperwork and pressure you to sign. They will offer rates that are unfathomably high. These loans typically have fees for paying it off early. If the lender makes you feel like you need to take a shower, it’s probably best to avoid it.
According to Let Me Bank, “even if you need cash fast, there are plenty of lenders offering bad credit loans with much more favorable terms. When you look in the right place, you may be pleasantly surprised at the choices that are available, regardless of what your current credit situation may be.” We know that when you’re in a tough spot financially, it can feel like you don’t have a lot of options, but they are out there. When you start searching, you will find that there are more lenders and people willing to work with your situation than you realized.